Australia’s electric vehicle market is booming, but scratch the surface and there are still big roadblocks ahead.

At a recent EV show in Melbourne, shiny new models and bold branding painted a picture of progress — yet behind the scenes, questions remained about affordability, infrastructure, and looming tax changes that could slow the momentum.

“Next year, 70 new models hit the market and new brands come to the market as well,” Ray Evans, the show’s organiser, said.

“So the consumers are the winners.”

Many of the new entrants are coming from one place: China.

Chinese brands dominate the ‘affordable’ segment

Chinese manufacturers like BYD and MG are carving out market share by undercutting legacy brands.

The lowest-cost EV on the market sells for $30,000 before on-road costs.

“We’re starting to see the Chinese electric makers catch up, and that’s another big factor because they’re pitching pretty interesting electric vehicles at a lower price,” Giles Parkinson, founder of The Driven, said.

Tesla is still the biggest-selling EV maker in Australia at 4,589 cars sold in June.

But once plug-in hybrids are included, BYD outsold Tesla in the first half of 2025.

EVs account for a growing, but small, slice of the market

Despite the hype, electric vehicles still account for only a fraction of new car sales.

In June, a record of just over 10 per cent (13,169 vehicles) of new car sales were electric, according to data from the Federal Chamber of Automotive Industries and Electric Vehicle Council, compiled by The Driven.

If you include plug-in hybrids, electrified cars made up 15.2 per cent.

While lower sale prices and lower running costs are enticing, there are some concerns about long-term reliability, resale value and local servicing support.

Some potential buyers remain cautious, especially about charging their cars on longer trips.

“We are still exploring, because we are very used to the petrol, you know,” said one woman at the show.

Others say they are ready — if the price and size are right.

“We’ve driven a few, it’s quite smooth, so I am happy to go with an EV,” said another.

“I don’t ever have to go to a petrol station anymore. It’s just about finding the right size of car.”

Government emissions rules force car makers’ hands

Australia’s new vehicle emissions standards (NVES) introduced this year are expected to boost EV sales. This month, penalties kicked in for car makers who did not meet the new fleet-wide emissions targets.

Basically, the NVES sets an emissions ceiling on the total car sales of each automaker, with heavy penalties for those who exceed it.

There is a lot of debate about whether the standards are tough enough to meet previous forecasts about the take-up for EVs.

To dodge fines, car makers will need to balance the sales of high-emission models like utes and 4WDs by selling hybrids and EVs to bring down their overall fleet emissions.

Industry observers say those rules act as a powerful incentive for car makers that continue to sell petrol vehicles to shift to EVs and hybrids, even at a loss.

“So you’re starting to see them really push out some of their offerings at a much lower price just to sort of get that sales number up,” Mr Parkinson said.

“Because if they don’t meet those sales numbers or those emissions standards — and it’s an average, it’s not applied to each individual car, it’s an average over a year — they don’t meet that average, then they have to pay another car maker credits.

“And they’d rather keep the money themselves, even if they have to take a bit of a loss on their own cars.”

The infrastructure problem no one wants to fix

XPeng is another Chinese brand that sees Australia as an attractive market for EV car makers.

“Australia doesn’t have a domestic car industry that we need to protect, so a lot of those potential tariffs or barriers or boundaries for entry have gone,” Jason Clarke, XPeng distributor and CEO of True EV, said.

However, despite government rhetoric around the shift to EVs, Australia still lacks a national charging strategy — and consumers are bearing the brunt.

“I travel to Canberra a bit from Sydney … I do find I have to plan for charging,” said Mr Clarke.

“With fast charging, you can get a full charge in 20 minutes, but that’s depending on the supply, and if you’re getting 20 kilowatts being fed in or 150 is very, very different.”

EV tax exemptions under review

There are other major roadblocks on the horizon for the EV market.

Despite the high court ruling that Victoria’s version of the EV road user tax was unconstitutional, such a tax in place of the fuel excise tax is considered inevitable by many, including the federal treasurer.

“[A] road user tax placed on top of the already existing taxes really doesn’t make sense,” Scott Maynard, managing director of Polestar Australia, said.

Also under threat is the fringe benefits tax exemption on EVs — a policy widely credited with driving recent growth.

Mr Maynard is instead calling for the federal government to scrap tax breaks for utes.

“That’s an exemption that has been afforded to those vehicles since 1986 and costs taxpayers millions of dollars,” he said.

“It makes far more sense to put those subsidies towards vehicles that will create cleaner air, and also help our health and also put vehicles in the hands of customers that are cheaper to get into and cheaper to own.”

Tesla owners shrug off competition — for now

Reduced US government subsidies have already knocked Tesla’s sales.

But back at the Melbourne EV show, there was no official Tesla stall to guard against the growing threat to its market dominance in Australia.

Instead, a diehard group of Tesla owners was happy to represent the company for free.

“We are just a group of people who love our cars,” Ross Hetherington, a long-time Tesla driver, said.

Mr Hetherington was quick to defend the brand’s controversial CEO, too.

“I drive the car for the car. I mean, Elon Musk owns 12.5 per cent of Tesla. He’s not… he… Tesla employs 150,000 people globally. He’s one man.”

Asked if he would ever return to a petrol vehicle?

“There is no way,” he said.

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